Turnover tax is also known colloquially as value added tax. In principle, all services provided by a company in Germany in return for payment are subject to German sales tax. Measured in terms of revenue, VAT is one of the most important taxes in the Federal Republic of Germany.
In particular, the following are subject to VAT
- deliveries (e.g. sales of goods) and other services (e.g. services) that are carried out in Germany for consideration as part of business activities.
- the import of goods from a third country into Germany (the resulting import VAT is levied by customs) and
- the intra-Community acquisition (purchase of goods from other countries of the European Union).
There are two tax rates, the general tax rate of 19% and the reduced tax rate of 7%. In addition, since 01.01.2023, a so-called zero tax rate applies, among other things, to the supply and installation of photovoltaic systems, including electricity storage systems, on residential buildings (Section 12 (3) of the German VAT Act).
The reduced tax rate of 7% applies in particular to sales for basic daily needs, such as food, books, newspapers, cultural events and journeys on local public transport.
The VAT Act contains an extensive catalog of services that are exempt from VAT. These include, among others
- Turnover from work as a doctor, dentist or alternative practitioner,
- Turnover from activities as a building society and insurance agent,
- Turnover from the sale, letting and leasing of real estate,
- the granting of loans,
- Supplies of goods to other EU member states,
- Export deliveries to countries outside the EU.
Note
You can also find more information on VAT in the "Tax tips" and "Brochures" provided by the Ministry of Finance at Baden-Württemberg under"Publications". You can also obtain information from your tax office.
The legal basis for the collection of VAT is the VAT Act.